Natural gas futures have been testing its three week low as the time window for demand ticks away. Investors and traders alike are patiently monitoring near-term weather forecasts to gauge the strength of demand for natural gas.
Natural gas futures reached a low earlier today of $2.649 per million British thermal units at New York’s Mercantile Exchange – a price not seen since making contract lows nearly three weeks ago. Speculators on the bearish side have the outlook that warmer weather in most of the country will keep a lid on later-winter demand. Peak season for domestic natural gas use is between November through March.
“It’s not just the mild-weather in most of the country creating the bearish stance for natural gas futures, but also much supply that ‘wasn’t used-up’ because of the mild winter,” said Devin Brady, President of Progressive Trading Group in Sherman Oaks, CA, sharing his fundamental analysis regarding the current natural gas futures situation. Brady added, “Energy producers forecasted wrong based on last year’s demand when supplies were 55% below the five-year average.”
Natural gas futures trend is down, but at a crossroads. A natural gas futures breakout above $3.05 could bring prices back to the $3.40 range, while a break below $2.59 with follow-through could send it to uncharted territory (in my study).
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